Current Attempt in Progress

Ivanhoe Shovel Corporation has decided to bid for a contract to supply shovels to the Honduran Army. The Honduran Army intends to buy $1,200$ shovels per year for the next $3$ years. To supply these shovels, Ivanhoe will have to acquire manufacturing equipment at a cost of $$187,000.$ This equipment will be depreciated on a straight$-$line basis over its five$-$year lifetime. At the end of the third year, Ivanhoe can sell the equipment for exactly its book value $($ $$74,800).$ Additional fixed costs will be $$36,000$ per year, and variable costs will be $$4$ per shovel. An additional investment of $$24,000$ in net working capital will be required when the project is initiated. This investment will be recovered at the end of the third year. Ivanhoe Shovel has a $27$ percent marginal tax rate and a $18$ percent required rate of return on the project. What is the lowest possible per shovel price that Ivanhoe can offer for the contract and still create value for its stockholders? $($Round Round CF Opns answer to $O$ decimal places, e$.$g$.5,275$ and final answer to $2$ decimal places, e$.$g$.15\mathrm{.}25.)$

Shovel price

$

Current Attempt in Progress

Ivanhoe Shovel Corporation has decided to bid for a contract to supply shovels to the Honduran Army. The Honduran Army intends to buy $1,200$ shovels per year for the next $3$ years. To supply these shovels, Ivanhoe will have to acquire manufacturing equipment at a cost of $$187,000.$ This equipment will be depreciated on a straight$-$line basis over its five$-$year lifetime. At the end of the third year, Ivanhoe can sell the equipment for exactly its book value $($ $$74,800).$ Additional fixed costs will be $$36,000$ per year, and variable costs will be $$4$ per shovel. An additional investment of $$24,000$ in net working capital will be required when the project is initiated. This investment will be recovered at the end of the third year. Ivanhoe Shovel has a $27$ percent marginal tax rate and a $18$ percent required rate of return on the project. What is the lowest possible per shovel price that Ivanhoe can offer for the contract and still create value for its stockholders? $($Round Round CF Opns answer to $O$ decimal places, e$.$g$.5,275$ and final answer to $2$ decimal places, e$.$g$.15\mathrm{.}25.)$

Shovel price

$